In the country of Tropica, output is growing at a rate of 5 percent per annum: delta Y/Y
=0.05. Also, the savings rate in this country is s = 0.10, and the depreciation rate =0.05. What should be the capital output ratio so that the economy is consistent with the Harrod- domar growth model?
Consider the situation above with a Solow model. Let the production function be y = k^0.5 where y= Y/L output per worker, k =K/L capital per worker. In the steady state what capital-labor ratio (k) would you expect to observe in the country? Assume delta L/L = 0.04
Suppose another economy which is characterized by the production function y = A(k)^ ½ , where y =Y/L is output per worker, k = K/L is capital per worker, and A is a productivity index. Given that the rate of growth of output per worker deltay/y = 0.02 and the rate of growth of capital per worker delta k/k = 0.02. What is the rate of growth in productivity?